Duke  University  Libraries 
Minority  report 
Conf  Pam  #285 

DTTOaSDBtY 


HOUSE    OF    llEPRESENTATIYES,  May  23,   1864.— Liid  on 
the  ta,ble  aud  ordered  to  be  printed.  ^  y 

MINORITY  RiYPOHT 

or    THK 

CUMMrrTEE  Of  ¥AY8  AAJ)  ME AJVS . 

On  the    lax  Bill. 


To  t/ie  Home  of  Representatives  : 

The  undersigned,   member  of  the  Committee  of  Ways  and  Means/ 
begs  leave  to  make  the  following  report :  4 

The  act  passed  at  the  last  session,  entitled  "  vVn  act  to  levy  addi- 
tiftnal  taxes  for  the  common  defence  and  support  of  the  Government," 
should  be  amended  so  as  not  to  levy  a  double  tax  upon  the  property 
of  baliks  or  other  corporations,  by  first  levying  a  tax  on  the  "  shares  " 
or  *'  interest,'.'  and  then  upon  the  assets,  in  the  shape  of  *'  gold  and 
silver  coin,  gold  dust,  gold  or  silver  bullion,"'  and  "  upon  all  moneys 
held  abroad,  or  upon  the  amount  of  all  bills  of  exchange  drawn  there- 
for on  foreign  countries." 

Further  than  this,  the  taxes  of  any  bank,  banking  company  or 
association,  canal,  navigation,  importing  and  exporting,  insurance, 
manufacturing,  telegraph,  express,  railroad  and  dry-dock  companies, 
and  all  other  joint  stock  companies,  of  every  kind,  whether  incorpor- 
ated or  not,  should  not  be  reduced. 

To  assess  the  value  of  all  property  taxed  under  the  second  section 
of  the  act,  by  prices  in  1860,  and  not  at  the  time  of  assessment  as 
fixed  by  the  act,  would  be  simply  to  release  all  that  class  of  tax-pay- 
ers from  a  very  large  proportion  of  their  taxes,'  amounting  in  the 
aggregate  to  many  millions.  .  ' 

The  tax  act  of  the  last  .session,  in  the  time  of  assessment,  malces 
two  classes  :  the  first  is'assessed  according  to  the  market  value  of  the 
same  or  "similar  property  in  the  neighborhood  in  1860 ;  the  second  is 
assessed  by  its  value  at  the  time  of  assessment.  This,  under  the  cir- 
cumstances, is  a  discrimination  in  favor  of  the  first  class  in  the  pay- 
ment of  taxes,  in  most  cases,  of  several  hundred  pencent. ;  the  rea- 
son for  which,  as  to  property  employed  in  agriculture,  is  obvious, 
though  the  policy  may  be  questioned,  but  it  might  be  difficult  to  dis- 


cover  the  reason  for  taxinj^  other  •jjroperty  put  in  that  .class  at  it.-j 
value  in  1860 — such,  for  instance,  as  gold  and  silver  wares  and  plate, 
jewels,  jewelry,  cotton,  tobacco,  kc. 

But,  however  this  may  be,  the  policy  of  now  transferring  all  that 
class  of  taxables  mentioned  in  the  second  section  of  the  law,  from  the 
second  to  the  lirst  class,  is  so  manifestly  injudicious  at  this  time,  that 
silence  in  one,  looking  at  it  as  I  do,  would  be  a  criminal  neglect  of 
public  interests.  It  would  be  to  release  from  taxes  levied  by  law  a 
class  not  oppressed — a  class  who,  as  a  general  rule,  have  made  more 
money  since  the  war  than  any  other  class. 

We  have  classes  who  are  suffering  under  our  system  of  taxation, 
and  it  is  only  when  such  suft'e'ring  is  of  the  most  serious  character 
that  our  authorities,  under  a  supposed  discretion,  have  ventured  to 
give  relief.  It  has  ofte»  been  the  case  that  persons  after  using  up 
most  of  their  supplies,  have  ascertained  that  one-tenth  of  all  was  due 
the  Government,  and  they  have  thus  been  compelled  to  surrender 
their  last  and  only  family  supplies.  If  any  class  is  relieved  from 
taies,  it  should  be  that  class  who  are  actually  suffering  and  who  are 
actually  oppressed  by  the  law. 

Upop  "what  principle  should  a  corporation  be  taxed  on  a  gold  basis, 
and  the  taxes  collected  in  a  currency  the  difterence  between  which  and 
gold  is  two  thousand  pi?r  cent.  ?  Is  this  a  fair  and  equitable  contri- 
bution to  the  support  of  the  Government  ?  The  Government  is  being 
carried  on  upon  the  currency,  and  not  upon  the  gold  basis.-  Every- 
thing paid  for  by  the  Government,  except  the  single  item  of  soldiers' 
■wages,  is  upon  the  basis  of  the  value  of  Confederate  currency.  Now* 
■what  is  to  become  of  a  Government  that  contracts  liabilities  upon  a 
basis  whose  proportion  to  the  rule  for  collecting  taxes  is  as  twenty,  to 
one  ?  If  the  Government  is  carried  on  by  paying  for  all  its  supplies 
.  an  advance  of  two  thousand  per  cent,  on  gold  prices,  and  still  collects 
its  revenue  upon  a  gold  basis,  it  requires  no  gift  of  prophecy  to  see 
its  end.  It  may  be  said,  in  answer  to  this,  that  it  would  make  no 
difference  if  the  Government  would  levy  a  sufficient  per  cent,  to  make 
up  for  the  disproportion  ;  and  this  is  admitted.  But  no  one  will  pre- 
tend that  five  pfer  cent,  on  property  assessed  at  a  gold  value  would  be 
at  all  adequate  to  the  wants  of  the  Government.  What  would  it  be  ? 
Take  a  railroad,  whose  stock  wasworth,  in  1860,  fifty  per  cent.  ;  it  is 
now  worth  two  hundred  per  cent.  Upon  a  share  the  Government 
would  collect  %2  50,  instead  of  '$  H' — that  would  be  one  and  one-fourth 
per  cent,  on  the  present  value,  and  to  be  paid  in  Confederate  money, 
which  upon  a  gold  basis  would  be  just  one-sixteenth  of  one  per  cent. 
Kow  is  this  a  tax  at  all  adequate  to  our  immense  expenditures  ?  The 
principle  adopted,  upon  full  consideration,  in  the  third  section  of  the 
act  passed  at  the  last  session  imposes  a  tax  oil  coin  of  five  per  cent, 
in  kind.  The  report  of  the  committee  reduces  the  taxes,  in  effect, 
from  five  per  cent,  to  one-sixteenth  of  one  per  cent.  Upon  the  sup- 
position that  the  stock  has  risen  from  50  per  cent,  to  200  per  cent.,  it 
is  a  reduction:  of  8,000  per  cent.  Shall  this  reduction  in  the  taxes  of 
corporations  be  mrffte  ?  If  so,  the  work  must  not,  can  not,  stop  here. 
We  have  coutracted-the  debt,  and  it  must  be  paid  or  repudiated  ;  and  if 


taxes  once  levied  be  released,  sooner  or  later  tliey  must  be  luid  some- 
where else.  Now  what  class  will  you  substitute  for  corporaticois  ? 
Besides,  our  appropriations  amount  to  1-drgely  over  §50(l,()iM),0(Hi,  as 
reported,  and  we  are  required  to  provide  the  means  of  paying  it.  ]f 
we  release  $.50, 001), ()()()  of  taxes  at  one  blow,  the  country  will  say, 
and  rightfully  too,  Congress  is  letting  down  upon  the  tax  (luestiou. 
and  the  only  remedy  is  for  the  Secretary  of  the  Treasury  to  rauke 
more  mon^y. 

But  this  is  not  the  only  question.  It  is  canceded  that  a  double  tax 
should  not  be  laid  upon  corporations  and  joint  stock  companies,  by 
first  taxing  the  stock  and  then  assets  which  the  stock  represents  ; 
and  yet  technically — as  the  stockholder  is  in  law  one  person  and  the 
corporation  another — it  would  be  difficult  to  distinguisli  between  that 
and  the  collection  of  a  tax  on  real  estate  bought  and  not  paid  for,  and 
also  a  tax  on  the  notes  given  for  the  purchase  money,  which  is  of 
frequent  occurrence  under  our  system  But  the  questi'cm  is,  how 
shall  the  tax  be  assessed  ? — on  what  ?  The  shares  or  stock,  or  shall 
it  be  levied  on  the  assets  ?  It  is  respectfully  submitted  that  a  tax  on 
the  shares  or  stock  is  not  such  a  tax  as  is  levied  on  the  property  of 
individuals,  and  that  a  markecl  and  palpable  discrimination  is  made  in 
favor  of  corporations  as  against  individuals.  What  is  the  rule  as  to  indi- 
viduals ?  Under  the  act  of  the  last  session  all  the  property  of  individ- 
uals, including  credits,  is  taxed,  and  no  credit  is  given  for  liabilities. 
No  matter  what  a  man  is  indebted,  nor  whether  his  property  is  bound 
for  the  debts  by  lien  or  mortgage,  the  property  is  taxed  without  re- 
gard to  the  debts.  This  rule  of  taxing  property  without  regard  to 
liabilities,  which  may  partially  or  wholly  cover  it,  has  been  much  dis- 
cussed, though  fully  adopted  by  our  Government,  and  perhaps  by  all 
the  States.  Now,  it  is  submitted  that  the  mode  adopted  by  the  com- 
mittee of  taxing  shares  or  stock  is  a  departure  from  the  general  prin- 
ciple, and  is  a  material  discrimination  in  favor  of  corporations. 
What  does  the  market  value  of  stocks  represent^  not  the  assets,  but  the 
difference  between  the  entire  assets  on  the  one  hand,  and  the  liabilities 
on  the  other.  What  enters  into  the  consideration  which  determines 
the  price  to  be  paid  for  stocks  in  the  market  ?  First,  the  assets  are 
ascertained,  and  if  there  be  no  liabilities,  then  the,  aggregate  value  of 
the  stocks  of  any  given  corporation  would.be  the  value  of -the  assets. 
But  the  liabilities  of  the  corporation,  of  course  have  much  to  do  in 
determining  the  price  to  be  paid.  In  other  words,  the  market 
value  #f  stocks  is  fixed  by  bankers  and  pther  dealers  in  stocks,  who 
take  into  the  estimate  the  assets  upon  the  one  hand,  and  the  liabili- 
ties upon  the  other,  and  with  a  keenness  of  perception, .perhaps  found 
in  no  other  profession,  they  strike  the  balance  and  fix  the  "  market 
value."  And  this  market  value  thus  ascertained,  is  to  be  the  guide 
in  determining  what  property  shall  be  taxed  ;  so  that  as  to  corpora- 
tions and  joint  sto^  companies,  they  would  be  taxed  upon  the  differ- 
ence between  the  assets  and  liabilities,  and  not  upon  their  property^  as 
other  persons  are.  ^ 

Upon  wfiat  principle  cap  this  be  justified  ?     Why   discriminate  in 
favor  of  corporations  ?     The  only  argument  advanced  for  this  discrim- ' 
inatiou  is,  that  corporatious   are  institutions  of  public  interest,  and 


ibuuded  upon  the  I'lea  of  public  necessity.  No  vmr  should  We  m<i«ie 
upon  corporations,  because  they  are  (rorporations,  but  certainly  ass  h 
general  rule,  corporations  in  their  dealings  with  other  persons,  and 
■with  each  other,  as  rigidly  and  as  exclusively  take  care  of  theiv  own 
interests  as  any  other  class  to  be  found.     . 

Whatever  advantages  the  public  derive  from  them  are  paid  f<;r.  and 
these  advantages  are  conferred  because  they  are  paid  for,  and  for  no 
other  reason. 

By  the  amendments  proposed,  the  taxes  of  1664  are  reduced  many 
millions.  We  are  not  in  ccndition  to  reduce  our  taxes;  however, 
other  expedients  may  check  t'he  disease,  taxes  is  the  only  remedy. 

Take  a  single  bank,  with  a  cnpital  of  !Si,l>''<),WO(l  paid*in,  and  the 
taxes  would  be.  under  thcamendments,  $5", MOO,  that  is,  if  the  stock 
was  worth  par  in  1860;  a  thing  not  very  probable.  Now  what  are 
the  taxes  under  the  present  law  taxing  the  assets?  After  relieving 
the  bank  frofn  a  double  tax,  this  bajik  would  likely,  as  bankers  would 
admit,  have  of  assets,  say. 
Specie  $20U,l)()0,  worth  20  for  one,  $4,00U,()(M),  o  per  cent. 

taxes,         *  !$'2(U),0(M) 

Sterling  exchange  $l()(l,()00,  worth  20  for  one,  $2,000,000, 

5  per  cent,  taxes,  100,000 

Solvent  credits  $800;000,  worth  three  for  one,  $2,400,000, 

5  per  cent,  taxes,  .  120,000 


Taxes  under  present  law,  $'420,000 

Taxes  under  amendments,  50,000 


Difference,  ♦  $370,000 

But  the  friends  of  the  amendment  say  such  a  tax  is  frightful.  We 
reply,  if  it  is,  it  is  neverthdess  fa'ir ;  it  is  exactly  what  that  aggre- 
gate of  property  belongin»;  to  individuals  yields.  But  it  is  not  so  un- 
reasonable a  tax  for  the  times.  $420,000  paid  for  the  protection  of 
$8,400,000,  is  by  no  means  a  heavy  sacrifice,  when  we  remember 
that  our  enemies,  in  violation  of  all  the  rules  of  civilized  warfare, 
openly  avow,  and  constantly  make  good  that  avowal,  as  far  as  possi- 
ble, that  one  of  the  main  features  of  the  war  contemplates,  by  fire 
and  cortfiscation,  to  strip  us.  of  all  property. 

The  principal  reason  given,  by  the  friends  of  the  amendments,  for 
not  taxing  coin  belonging  to  the  banks  according  to  its  value  is,  that  the 
law  unconditionally  requires  tlie  banks  to  keep  it.  And  that  itw(Tuld 
be  unjust  to  tax  gold  according  to  its  value,  held  by  a  corporation, 
when  it  was  only  obeying  the  behests  of  the  law  in  holding  it.  Such 
an  argument  is  erroneous  in  this,  that  it  assumes  this  condition  of 
the  law  requiring  banks  to  keep  on  hand  a  certain  amount  of  gold, 
to  be  an  arbitrary  and  gratuitous  codition  imposed,  whereas,  the 
truth  ig,  that  the  corporators  asked  a  charffered  privilege,  and  which 
taken  as  a  whole,  means  simply  a  right  to  issue  notes  and  purchase 
bills,  so  as  to  receive  interest  on  ^Jiree  dollars  for  every  one  dollar  of 
goM  in  the  vaults  of  the  bank. 
*A11  of  which  is  respectfully  submitted, 

'     A.  S.  COLYAR. 


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